Influence of Religion and Social Attitudes in Stock Market Participation

We investigate the relationship between religion and stock market participation. Using data for a representative sample of the Chinese population, we find that compared with non-religious households, Buddhists are more likely to invest in stocks, while Muslims are less likely to invest in stocks. In contrast, the differences in stock market participation between non-religious households and other religious households, such as Taoists, Protestants and Catholics, are statistically insignificant. Furthermore, religiosity is negatively associated with the propensity to invest in stocks. Social attitudes turn out to be helpful in explaining the higher stock market participation of Buddhist households. Instrumental variable estimations show that the effects of being Muslim and Buddhist on stock market participation are likely causal.